Islamic “Ajman Bank” starts in Ajman

04Fév

Ajman Bank, the Emirate’s first Islamic commercial bank, was officially opened at a formal ceremony led by HH Sheikh Humaid bin Rashid Al Nuaimi, the Ruler of Ajman, to publicly celebrate the start of operations for both the Bank and its branch.

The flagship branch represents the retail side of Ajman Bank while corporate banking activity has been underway behind the scenes over the past six months. Ajman Bank will provide a wide range of banking services in the UAE for individual, business and government clients, all in compliance with Shari’ah principles.

Plans remain on track for further branches to be opened in Sharjah, Dubai and Abu Dhabi every quarter in 2009 and a second branch is set to open in Ajman later this month.

Ajman Bank PJSC, has started its operations in January 2009,. It is the first Shariah based Islamic bank incorporated and headquartered in the Emirate of Ajman. The Bank’s strategy is “to target the rapidly expanding Shariah financial services market with innovative products and services, designed to meet customers’ needs, all supported with outstanding levels of customer service”.

Ajman Bank was the first bank in the UAE in recent history to have decided to approach the market for an IPO. Though there are seven other Islamic banks in the UAE : Dubai Islamic Bank, Abu Dhabi Islamic Bank, Dubai Bank, Emirates Islamic Bank, Noor Islamic Bank, Sharjah Islamic Bank and Al Hilal Bank, only three banks have raised capital from the public so far.

Ajman Bank, the newest and the eighth Islamic bank being set up in the UAE, will mostly depend on Saudi Arabia and Bahrain markets for its human resources, according to the bank’s chief executive. Yousif Khalaf, CEO of Ajman BankAjman Bank, said getting talent for Islamic banks has become a difficult proposition, especially in the UAE and hence, Ajman Bank has to depend on other GCC markets to bring people to run the bank. Being from Bahrain himself, Khalaf said getting the right people may be the biggest challenge faced by banks, especially Islamic banks, where talent shortage is a critical issue. He said the new bank will introduce a new range of products, including mortgage finance products.

Ajman Bank aims to operate as a full-fledged Islamic bank supporting the on-going social and economic developments in Ajman by providing Shariah-compliant products and services including murabaha, mudarabah, istisna’a, musharaka, and ijara and other innovative Islamic products and services catering to the needs of the local market.

Ajman Bank to focus on UAE national market due to global financial crisis

The seventh Islamic lender in the UAE, Ajman Bank listed on the Dubai bourse in June, saying at the time it planned to establish itself in the UAE then look to other Gulf and Islamic countries for future growth.

The credit crisis has since caused turmoil in international markets and has also squeezed liquidity in the UAE, the world’s fourth largest exporter of crude oil, prompting the government to offer banks extra funds and guarantee deposits. The crisis is widely expected to slow down a Gulf Arab real estate boom, which is also prompting Ajman Bank to rethink its strategy.

« When it comes to the strategy… to allocating our assets … to liquidity positions and risk management scenarios, those will all be revisited because obviously now there is a need to set aside more liquidity than before, just in case, » he said. « Real estate… has been one of those sectors which may face some difficulties so obviously we have to be careful… Some sectors in which we feel more comfortable (are)…trade finance, financing small to medium-sized enterprises, consumer finance. »

The bank expects to open its first flagship branch in Ajman, one of the seven emirates comprising the UAE, in the fourth quarter, as planned. Khalaf said it would also have a presence in the main emirates, Dubai and Abu Dhabi, in the next year.

The newly established Ajman Real Estate Regulatory Agency (ARRA) has signed an agreement with the Ajman Bank to accept obligatory escrow payments from developers, officials said on Tuesday.

The escrow requirement, already in place in Dubai, requires developers to place all monies from investors into an account that can only be used for construction of the designated project.

“It is the first agreement that we have signed for an escrow account so far,” Omar al Barguthi, the director general of ARRA said.

At least 900 projects have been planned in the emirate, and many have sold off-plan units to buyers. Developers of these projects will now have to transfer deposits to escrow accounts. Without an account, developers will be refused registration and a licence to build from ARRA.

“We have already 22 registrations awaiting and from tomorrow, we will be ready to open all accounts, said Yousif Saleh Khalaf, the chief executive of Ajman Bank. The bank was expecting up to 50 developers to open escrow accounts within the next six months.

The bank is owned 25 per cent by the Government of Ajman and is 55 per cent public, on the Dubai bourse.